Economic recovery in the eurozone accelerated in the first quarter, growth edged higher in the first quarter, boosted by a return to growth in France and Italy and outpacing both the UK and US economies.
The single-currency bloc grew by 0.4% between January and March, disappointing economists’ expectations of 0.5% growth but improving on the fourth quarter of 2014, when gross domestic product increased by 0.3%.
The French economy smashed expectations, with growth of 0.6% in the first quarter following zero growth
The eurozone’s second-largest economy grew by 0.6% between January and March, following zero growth in the fourth quarter of 2014.
It was the strongest rate of growth in two years, fuelled by a surge in consumer spending according to the national statistics office, Insee. Economists had predicted a smaller rebound in GDP growth of 0.4%.
While France accelerated, growth in Germany more than halved in the first quarter to 0.3% from 0.7% in the previous quarter, disappointing expectations.
Christian Schulz, senior economist at German bank Berenberg, said that combined, the data suggested growth in the eurozone economy overall accelerated at a faster rate than the UK in the first quarter. UK growth unexpectedly halved between January and March to 0.3%.
The first estimate of first-quarter eurozone growth will be published by Eurostat at 10am UK time. Economists polled by Reuters are predicting growth of 0.5%, up from 0.3% in the fourth quarter of 2015.
Schulz said: “As a whole, the eurozone looks set to have grown slightly faster than major international rivals such as the UK and the US in this quarter, helped also by the 0.9% quarterly growth rate in the developed world’s new growth star Spain.
“Cheap oil was a major driver of growth, with consumption making big contributions in the first quarter in France and Germany,” he added.
Along with France, the Italian economy also returned to growth in the first quarter, with GDP increasing by 0.3%, following zero growth in the fourth quarter of 2014.
A pick-up in eurozone growth will soothe fears that the region is stuck in a rut of consistently sluggish growth. Deflationary fears have also started to fade, helped by a partial rebound in oil prices.
Net trade was a drag on the Germany economy between January and March, with imports growing at a faster rate than exports.
Destatis, the German statistics agency, said: “Foreign trade had a downward effect on economic growth. Although, according to provisional calculations, exports of goods and services were slightly up at the beginning of 2015 compared with the fourth quarter of 2014, imports recorded a much stronger increase.”
The annual growth rate slowed to 1.1% from 1.6%.
This article was written by Angela Monaghan, for theguardian.com on Wednesday 13th May 2015 09.04 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010